7 Quick Tips That Will Help Your Startup Get a Small Business Loan

7 Quick Tips That Will Help Your Startup Get a Small Business Loan

Getting business loans is critical for some startups. Even if you are bootstrapping, you will need some capital to get off the ground and start generating profit, or you'll need the extra money to scale operations. Unfortunately, getting a loan can be difficult, if you don't know what you're doing. Here are 7 quick tips that will give you that starting boost and get your idea going:

1. Get Your Financial Documentation Sorted

Your loan will likely require a thorough investigation of your finances as part of the application. So get on that as soon as possible. Make sure everything is in order, from your balance sheets to your cash flow statements. If it involves money and can be used to judge how profitable your company is or could be, get it in order. Don't bother trying to hide anything unfavorable. They will ask for it, and you will have to give it to them anyway.

2. Figure Out What Kind of Loan You Are Looking For

All loans are functionally the same, but some loans are better for certain situations and others. Some loans are designed for companies recovering from disasters and acts of god. Other loans are designed to protect paychecks, such as America's Paycheck Protection Program, which offers extra capital to keep a business running, given certain conditions, with the loan being forgiven if it is used properly. Look around. Find the deal that is best for you. If you’re unsure where to start, Eaton Community Bank has a unique partnership with the Michigan Small Business Development Center that offers information and resources to our customers.

3. Study

Just like any other topic, small business loans have their ins and outs, unique details that will allow you to approach lenders properly. Do your research. The more you know, the better you will be able to present your case. The better you present your case, the more you will look like you care about your business and the loan, which will help your odds of being approved.

4. Take Stock of Your Options

When looking for a loan for your startup, one of your first moves should be to figure out what kind of lenders will suit your situation. Take stock of how much you will ask for, and what requirements your business fulfills. From there, figure out what kind of lenders will be likely to approve your loan. Direct online lenders, banks large and small, can lend different amounts and have different requirements from applicants. Figuring out which ones will suit your needs and situation will help streamline the process. If you have questions, the Business Team at Eaton Community Bank is happy to assist.

5. Figure Out What Guarantees You Can Provide

Each loan comes with guarantees or securities, assets the lender can claim should you be unable to repay the loan. You need to figure out what you can offer them, as those guarantees can get you better terms for your loan. Just be sure to keep your personal assets out of the equation, as that can severely impact the rest of your life should the situation turn against you.

6. Figure Out Your Counter-Arguments Before You Apply

Lenders will look for any reason to deny your loan. That is not because they are spiteful, but because they need to make sure that money lent out has as good a chance as possible to be returned with interest. That is why you need to look over your record and history honestly so you can figure out where your black marks are. From there, you need to clean up those marks. For issues you cannot fix, prepare your arguments. Explain how those marks will not impact your ability to turn a profit. Get deep into the details. The clearer your explanations and plans are, the more likely a lender is to give you a pass.

7. Check Your Online Presence

Lenders will do their due diligence and check into your background to confirm your details, and one of the places they will check is online. You need to ensure whatever they find properly represents your company. Refine your social media presence and make sure that everything is in order. Review your site and see if there are any dead links and if it is as professional as it could be. Even negative reviews need to be handled, depending on their severity.

While those are far from the only tips that will help you secure a loan for your company, they should get off to a good start. Don't be nervous. If you do your due diligence, and your startup has legitimate potential, you should have no problem finding a lender that suits your needs.